Global Wheat Market Dynamics: What Is the Role of the EU and the Black Sea Wheat Exporters?

Abstract

Over the last two decades, three countries in the Black Sea Region—Russia, Ukraine, and Kazakhstan—became global leaders in grain production and trade, and replaced the USA and France as the most previous largest wheat exporting countries. In this study we investigate world wheat price linkages and identify the current “price leaders” of the global wheat market. This empirical analysis is focused on the price relationships between eight of the largest wheat exporting countries and uses a cointegration framework and a vector error-correction model. The results show that, regarding price formation on the world wheat market, the French price is more important for transmitting price signals to other wheat export markets compared to the USA. Furthermore, our results indicate that, despite being leaders in wheat export volumes, the Black Sea wheat prices in Russia and Ukraine adjust to price changes in France, the USA, and Canada. Albeit unrealistic in the short run, the creation of the futures market in the Black Sea region might significantly improve the participation of Black Sea markets in price formation of the global wheat market.

Impact of the Ruble exchange rate regime and Russia's war in Ukraine on wheat prices in Russia

“…Based on results of the test on weak exogeneity for the 2011-2019 time period, Heigermoser et al (2021) find a leading role of the French wheat export price in the Egyptian GASC tender market, despite the high market share of wheat exporters in the Black Sea region and Russia. This is confirmed by results of Svanidze and Duric (2021) suggesting that the French wheat export market transmits price signals to the Rus- 5 The importance of Russian wheat prices in price discovery on the world market due to increased grain exports needs further investigation. sian market but not vice versa.…”

Conceptual System Dynamics and Agent-Based Modelling Simulation of Interorganisational Fairness in Food Value Chains: Research Agenda and Case Studies

“…Indeed, market imperfections were detected within the output and input markets for both the milling and baking sectors in France and the UK when market power was assessed by 'Mark-up' and 'Mark-down', or 'Lerner' index [71]. The French wheat market is integrated with the world market and leads the EU market concerning wheat price formation, but it is currently facing high competition from Black Sea grain exporters (i.e., Russia, Ukraine and Kazakhstan) [72].…”

“…This includes findings from governance analysis through expert or élite interviews, analyzed in conjunction the documentary and secondary data sources [8]. Furthermore, economic analysis on market power, price formation, technical efficiency and persistency of relations [63][64][65] and specifically in the context of the wheat to bread case study [71,72] provided insights to the real world system being modelled. The documentation of the conceptual model development was through agent tables and cognitive maps in group modelling workshops.The validation of the simulation modelling conceptualisation was carried out through the process of iterative group conceptual model building workshops (application of cognitive and agent maps), based on expert and stakeholders' opinion in relation to gaining agreement on the true representation of the system components and their interrelations.…”

Dynamics of Food Value Chains: Resilience, Fairness and Sustainability

“…The results show that, regarding price formation in the world wheat market, the French price is more important for transmitting price signals to other wheat export markets compared to that of the USA. The results indicate that, despite being leaders in wheat export volumes, the Black Sea wheat prices in Russia and Ukraine adjust to price changes in France, the USA and Canada [16].…”